AEP and Duke to Form Joint Venture to Build Transmission

Aug 11, 2008 - PRNewswire

Columbus, Ohio, - American Electric Power has formed a
joint venture company with Duke Energy to build and own
new electric transmission assets.

Through the 50-50 partnership, AEP and Duke are proposing
to build 240 miles of extra-high voltage 765-kilovolt (kV)
transmission lines and related facilities in Indiana. The
project would link Greentown Station (near Kokomo, Ind.)
with Rockport Station (east of Evansville, Ind.).

Estimated costs for the project are approximately $1 billion,
but final costs will depend on the routing of the line,
equipment and commodity costs. AEP and Duke will be working
with the PJM Interconnection (PJM) and Midwest ISO (MISO)
to determine the optimal configuration for the final project.
The project will be wholly owned by the joint venture. AEP's
share of the costs will be 50 percent of the total.

The project is part of AEP's vision of expanded extra-high
voltage transmission to improve the reliability of the nation's
transmission grid, allow more efficient use of existing
electricity production and delivery infrastructure, protect
national security and expand opportunities for new generation,
including renewables.

"Indiana is home to nearly 27,000 megawatts of generation,
and the state's transmission system delivers electricity
across the Midwest and beyond. To continue reliable delivery
of this energy and add the output of new generation that
has been proposed in the state, Indiana needs additional
extra-high voltage transmission capacity. A reliable supply
of electricity is fundamental to our quality of life and
economic growth, and Indiana's transmission system, which
was largely completed more than 25 years ago, needs to grow
as well to continue to meet the needs we have today and
in the future," Morris said.

AEP and Duke will submit the Greentown-Rockport proposal
to PJM and MISO for consideration in their transmission
expansion plans. The joint venture will file in Indiana
to operate as a transmission utility and will file seeking
rate approval for the project from the Federal Energy Regulatory
Commission (FERC) in third-quarter 2008. The in-service
date for Greentown- Rockport will be determined by the MISO
and PJM planning processes, with the earliest possible completion
in 2014 or 2015.

"Like most parts of the country, Indiana will see significant
benefits from extra-high voltage transmission expansion.
The need to build additional transmission provides the opportunity
to invest in a long-term transmission solution that will
facilitate development of additional generation, including
renewables, and support the reliable transport of electricity
to fuel future economic growth. For example, more than 3,000
megawatts of wind power has been proposed in central Indiana,
but additional transmission is necessary to bring it online,"
said Susan Tomasky, president, AEP Transmission.

"Building more extra-high voltage 765-kV transmission lines
in Indiana can provide significant economic and environmental
benefits. A 765-kV transmission line requires less land
to carry more power than lower voltage lines, and the 765-kV
line would cost less than half as much to build. A 765-kV
transmission line also operates more efficiently than lower-voltage
lines, reducing the amount of electricity that needs to
be generated by reducing line loss - electricity lost during
transport. The new 765-kV designs that would be used for
this project have line losses of less than one percent,
compared with losses as high as 10 percent for a lower-voltage
alternative," Tomasky said.

The joint venture will operate as a transmission utility
and be subject to the rules and regulations of FERC, the
State of Indiana, PJM and MISO. Equity ownership of the
new company will be equally split between AEP and Duke.

American Electric Power is one of the largest electric
utilities in the United States, delivering electricity to
more than 5 million customers in 11 states. AEP ranks among
the nation's largest generators of electricity, owning nearly
38,000 megawatts of generating capacity in the U.S. AEP
also owns the nation's largest electricity transmission
system, a nearly 39,000-mile network that includes more
765-kilovolt extra-high voltage transmission lines than
all other U.S. transmission systems combined. AEP's transmission
system directly or indirectly serves about 10 percent of
the electricity demand in the Eastern Interconnection, the
interconnected transmission system that covers 38 eastern
and central U.S. states and eastern Canada, and approximately
11 percent of the electricity demand in ERCOT, the transmission
system that covers much of Texas. AEP's utility units operate
as AEP Ohio, AEP Texas, Appalachian Power (in Virginia and
West Virginia), AEP Appalachian Power (in Tennessee), Indiana
Michigan Power, Kentucky Power, Public Service Company of
Oklahoma, and Southwestern Electric Power Company (in Arkansas,
Louisiana and east Texas). AEP's headquarters are in Columbus,
Ohio.

This report made by American Electric Power and its Registrant
Subsidiaries contains forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act
of 1934. Although the registrants believe that their expectations
are based on reasonable assumptions, any such statements
may be influenced by factors that could cause actual outcomes
and results to be materially different from those projected.
Among the factors that could cause actual results to differ
materially from those in the forward-looking statements
are: electric load and customer growth; weather conditions,
including storms; available sources and costs of, and transportation
for, fuels and the creditworthiness and performance of fuel
suppliers and transporters; availability of generating capacity
and the performance of AEP's generating plants; AEP's ability
to recover regulatory assets and stranded costs in connection
with deregulation; AEP's ability to recover increases in
fuel and other energy costs through regulated or competitive
electric rates; AEP's ability to build or acquire generating
capacity (including the company's ability to obtain any
necessary regulatory approvals and permits) when needed
at acceptable prices and terms and to recover those costs
(including the costs of projects that are canceled) through
applicable rate cases or competitive rates; new legislation,
litigation and government regulation, including requirements
for reduced emissions of sulfur, nitrogen, mercury, carbon,
soot or particulate matter and other substances; timing
and resolution of pending and future rate cases, negotiations
and other regulatory decisions (including rate or other
recovery of new investments in generation, distribution
and transmission service and environmental compliance);
resolution of litigation (including disputes arising from
the bankruptcy of Enron Corp. and related matters); AEP's
ability to constrain operation and maintenance costs; the
economic climate and growth in AEP's service territory and
changes in market demand and demographic patterns; inflationary
and interest rate trends; volatility in the financial markets,
particularly developments affecting the availability of
capital on reasonable terms and developments impairing AEP's
ability to refinance existing debt at attractive rates;
AEP's ability to develop and execute a strategy based on
a view regarding prices of electricity, natural gas and
other energy-related commodities; changes in the creditworthiness
of the counterparties with whom AEP has contractual arrangements,
including participants in the energy trading market; actions
of rating agencies, including changes in the ratings of
debt; volatility and changes in markets for electricity,
natural gas, coal, nuclear fuel and other energy-related
commodities; changes in utility regulation, including the
implementation of the recently passed utility law in Ohio
and the allocation of costs within regional transmission
organizations; accounting pronouncements periodically issued
by accounting standard-setting bodies; the impact of volatility
in the capital markets on the value of the investments held
by AEP's pension, other postretirement benefit plans and
nuclear decommissioning trust; prices for power that AEP
generates and sells at wholesale; changes in technology,
particularly with respect to new, developing or alternative
sources of generation; other risks and unforeseen events,
including wars, the effects of terrorism (including increased
security costs), embargoes and other catastrophic events.